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Nov. 5 – The
telecommunications chapter of the Trans-Pacific Partnership
agreement would reduce barriers to market entry, helping U.S.
companies access 11 other telecommunications markets with an
estimated value of over $300 billion per year, the Office of the
U.S. Trade Representative said.

The pact broadly seeks to curb prohibitions on
investment, reduce anti-competitive behaviors, increase access to
spectrum and provide a common regulatory framework similar to the
one in the U.S., leveling the playing field for U.S. firms to
compete abroad.

“The provisions in the telecommunications chapter –
not surprisingly — mirror the major elements of federal
telecommunications law – which remains a very good framework in
theory,” said Brad Ramsay, the general counsel at the National
Association of Regulatory Utility Commissioners.

The text includes language aimed at increasing
competition for mobile services in TPP markets and includes various
provisions to address spectrum allocation, mobile roaming rates,
pole access, network interoperability, interconnection and number
portability.

The mobile network provisions of the 12-nation pact
could provide a boon to wireless carriers such as Verizon Wireless
Inc., AT&T Inc., and Sprint Corp. and T-Mobile US Inc. by
opening markets that were previously too challenging or too
expensive to enter.

A footnote under Article 13.3 of the agreement
excludes U.S. wireless carriers from the chapter's provisions
regarding anti-competitive restrictions on established
telecommunications companies in the various 12 nations. The
provision adopts the concept that the U.S. wireless marketplace is
considered more competitive than in other foreign markets and thus
should be subject to less stringent requirements under the terms of
the treaty.

In addition, U.S.-based rural local exchange
carriers are exempted from the treaty's market access rules.

The trade pact was negotiated by the 12 countries —
Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, the U.S. and Vietnam. The official
release of the text Nov. 5 starts the clock ticking for
ratification by all the nations involved.

Mobile Roaming

The TPP is the first free trade agreement to address
the issue of “unreasonable” mobile roaming rates for voice and data
services, according to the USTR. The agreement broadly seeks to
address the way foreign wireless carriers price international
roaming rates, an issue that has long been a thorn in the side of
U.S. travelers abroad.

Specifically, article 13.6 of the text urges TPP
parties to seek greater transparency and pursue “reasonable” rates
for international mobile roaming services via rate regulation, if
deemed necessary —though they are not required to do so under the
treaty.

Companies in TPP countries are encouraged under the
agreement to exchange information regarding their retail
international roaming rates and reduce impediments that may prevent
consumers from using their mobile devices to access networks while
abroad.

The mobile roaming section also includes terms by
which TPP parties may negotiate wholesale international mobile
roaming rates with other TPP members and ensures that such rates
and conditions adhere to the treaty's most-favored-nation (MFN)
requirements.

The MFN trade policy — outlined in the WTO's General
Agreement on Tariffs and Trade — extends concessions or beneficial
trade terms to every country that is subject to an agreement.

Incumbent Restrictions

Once enacted, the treaty will help U.S.
telecommunications companies enter markets in the Pacific region by
reducing obstacles to network construction and minimizing other
financial and operational hurdles, according to the USTR summary of
the telecommunications provisions.

The TPP also “closes a loophole that has prevented
the use of trade disciplines in markets where a dominant mobile
operator has been able to thwart competition,” USTR said.

Specifically, article 13.7 ensures that “major
telecommunications suppliers” in any of the participating countries
offer “no less favorable treatment” to other TPP-based companies
than it would accord to its affiliates or non-affiliated service
suppliers.

The section applies to the availability,
provisioning, rates and quality of similar public
telecommunications services among other terms.

Interconnection

“In a competitive environment, telecommunications
depends on the ability of suppliers to access each other's
facilities and services,” USTR said.

The telecommunications chapter contains language
aimed at ensuring that companies offer interconnection to their
facilities and equipment on a reasonable and timely basis. The
provision includes safeguard measures to protect the
confidentiality of commercially sensitive information.

The parties to the TPP also urge incumbents to
provide physical co-location of equipment necessary for
interconnection or access to unbundled network elements under
reasonable, non-discriminatory rates, terms and conditions. In the
context of the TPP, incumbents are companies that are deemed to
have an advantage over new entrants via market control or control
of physical network assets.

The text further urges that incumbents provide
leased circuits, and make their services available for resale and
under reasonable, non-discriminatory rates, terms and
conditions.

Anti-Competitive Practices

The chapter includes other competitive safeguards to
ensure that incumbent providers, acting alone or in a group, are
barred from engaging in anti-competitive practices. In particular,
article 13.8 prohibits parties from:

• engaging in anti-competitive
cross-subsidization;

• using information obtained from competitors with
anti-competitive results; and

Market Forces

In the telecommunications industry “reliance on
market forces and commercial negotiations are the preferred means
of achieving policy goals, absent market failure or monopolistic
behavior,” the USTR summary said.

Article 13.3 of the TPP pact specifies that
telecommunications regulators have a free hand to:

• “engage in direct regulation either in
anticipation of an issue that the party expects may arise or to
resolve an issue that has already arisen in the market;

• rely on the role of market forces, particularly
with respect to market segments that are, or are likely to be,
competitive or that have low barriers to entry, such as services
provided by telecommunications suppliers that do not own network
facilities; and

• use any other appropriate means that benefit the
long-term interest of end-users.”

Network Access

The treaty also sets out new terms that encourage
TPP governments and regulators to offer “fair access to scarce
resources” such as spectrum, telephone numbers, and
government-controlled rights of ways, the USTR said.

Specifically, article 13.4 permits companies in the
participating countries to access and use any public
telecommunications service — such as spectrum, rights of way and
phone numbers — offered in each territory on reasonable and
non-discriminatory terms and conditions.

Network providers are urged under the agreement to
offer counterparts from other TPP member countries number
portability and access to telephone numbers on a nondiscriminatory
basis. The text includes temporary exemptions to the number
portability provision for Brunei Darussalam, Malaysia and Vietnam,
for whom the provision is not yet technically feasible.

Article 13.14 outlines provisions whereby major
suppliers in TPP countries must provide access to poles, ducts,
conduits and rights-of-way or any other structures necessary for
the construction of a telecommunications network.

Article 13.15 includes a provision to ensure that
TPP members have access to the landing stations for international
submarine cables.

Public Service, Privacy

The text includes network access restrictions to
preserve the “public service responsibilities” or protect the
“technical integrity” of incumbent networks.

The chapter specifies that members may impose other
conditions for access to public communications networks pertaining
to:

• specialized technical interfaces and
protocols;

• interoperability;

• terminals that interface or attach to the
networks; and

• licensing procedures.

The text includes provisions to ensures any company
based in a participating country may use another participating
country's public telecommunications network to transmit information
across borders — including “intra-corporate communications, and for
access to information contained in databases or otherwise stored in
machine-readable form.”

The agreement permits TPP parties to ensure the
security and confidentiality of messages and to protect the privacy
of personal data of end-users “provided that those measures are not
applied in a manner that would constitute a means of arbitrary or
unjustifiable discrimination or a disguised restriction on trade in
services.”

Transparency

“The telecommunications chapter ensures the
opportunity for stakeholders on all sides to provide input,
including for innovative suppliers to demonstrate how they can meet
policy objectives more efficiently, for example through the use of
technology, or innovative service offerings,” USTR said.

Specifically, the text delineates how participating
countries should implement licensing procedures, and prods them to
publish the current state of their respective spectrum allocations
and ensure that their telecommunications regulators have adequate
enforcement authority.

Article 13.21 defines the process by which
telecommunications companies may seek legal recourse in case of
disputes.

The treaty further seeks to establish a TPP
committee on telecommunications to review the implementation of the
telecommunications chapter, discuss and report any relevant
findings related to the chapter and carry out other
functions.

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